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Brookfield Properties is planning to add approximately 858,000 square feet to metropolitan Phoenix’s high-demand industrial market with the development of Eastmark 202 Logistics Center. The global real estate services company will build the three-building campus just off Loop 202 in Mesa, Ariz.
Brookfield is entering new territory of sorts with Eastmark 202, as the project marks the company’s first investment in new logistics development in the Greater Phoenix area. “In seeking to expand our presence in Phoenix, we were very selective in identifying sites that minimized planning risk, while providing the ability to capitalize on the strong tenant demand that persists throughout the city,” Andrew Brent, a senior vice president with Brookfield Properties , told Commercial Property Executive.
Eastmark 202 will take shape on a 44-acre site at the intersection of E. Elliot Road and S. Everton Terrace, roughly 35 miles east of downtown Phoenix in the Southeast Valley submarket. Securing a developable site for new industrial projects in the metro area is no simple feat, and it is even more challenging in the Southeast Valley.
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“Competition for sites across this submarket has been strong over the past nine to 12 months. The economy is diverse, and there is an array of businesses that are seeking either an entry point or an expansion into the market,” Brent said. “Developers have been meeting that demand by acquiring unentitled sites, taking the time to obtain the necessary approvals, then bringing forward those developments themselves. Our logistics team was able to leverage the reach of the broader Brookfield platform to identify an off-market opportunity and moved swiftly to secure the site.”
Catering to user needs
Eastmark 202 will consist of a single cross-dock building and two single-load buildings, each featuring 40-foot clear heights and 200-foot truck courts. As noted in a May 2022 document submitted to the city of Mesa’s Planning Division, the distribution facilities will be constructed of concrete, with hybrid wood roofs, metal paneling and exterior canopies.
The logistics park’s buildings will maintain complementary architectural styles designed to appeal to a variety of users, including manufacturing, warehouses and offices. Additionally, all three facilities will have the capacity to accommodate single or multiple tenants.
Brookfield plans to commence construction of Eastmark 202 in the second quarter of 2023. If all goes according to schedule, the project will reach completion early 2024.
keeping pace
The metropolitan Phoenix industrial market continues to thrive, due in no small part to its expanding population and strong labor pool, and the numbers tell the story. In the third quarter of 2022, the metro’s industrial vacancy remained in a historically low range at just 3.1 percent, and conditions were even tighter in Mesa, which recorded a 2.2 percent vacancy rate in the third quarter, according to a report by CBRE. Furthermore, there were no new deliveries or under-construction projects in Mesa during the first three quarters of the year.
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Eastmark 202 will be in a prime position to capture demand opportunities should fundamentals remain robust in the Southeast Valley submarket—and there is every indication that they will endure. “The Southeast Valley continues to be one of the most active submarkets,” according to the CBRE report. “Expect vacancy to decrease in Q4 2022 as there are 68 tenants looking for a grand total of 8.7 million square feet in the submarket.”
Beyond the Southeast Valley, Brookfield has other ideas about bridging the gap between supply and demand in the Greater Phoenix area; the company is actively working on other sites for new development. “We have strong conviction in our business plan based on the market activity we have witnessed over the past 12 months. We are actively in the market seeking new investment opportunities and have an optimistic outlook for the market,” Brent noted.
Big picture
Brookfield, which has also been keeping making notable moves in the office and mixed-use sectors, has been busy helping to fill the void in industrial offerings across the county all year. In August 2022, the company announced that it would develop Rockland Logistics Center, a 1.2 million-square-foot distribution campus in Suffern, NY, in Rockland County. And Brookfield increased its industrial portfolio by 3.5 million square feet in February with the joint venture acquisition of a national collection of 51 logistics assets.
Looking ahead to 2023, Brent said that Brookfield’s logistics business is well-positioned to continue with investment and development activity. “While there may be some uncertainty on the capital markets front at present, the demand side from our tenants continue to exhibit continuous momentum,” Brent added. “With strong leasing fundamentals compounded by ongoing lack of supply/demand balance, we expect resilience in the industrial sector’s performance going forward.”
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